Solar power offers secure and affordable energy that supports climate goals

LONDON/NEW YORK, November 14 — African petrostates risk financial instability if they bet their economic future on expanding oil and gas exports instead of embracing solar energy, warns a report from the financial think tank Carbon Tracker released today.

At COP26 last year African governments, especially Egypt, Algeria and Nigeria, announced that their net zero vision would be powered by natural gas,[1] but the report says this is a high-risk strategy because demand for fossil fuels is likely to fall in the medium term.

It calls on policymakers across the continent to prioritise a transition to renewables, particularly solar, and adopt policies to attract private investment. European policymakers should support them with finance and policies designed to mobilise private investment. This will help meet climate goals, bring power to millions without it, and create a secure and affordable source of domestic energy, insulating African countries from volatile oil and gas prices.

The energy crisis sparked by Russia’s invasion of Ukraine has seen European countries turn to Africa to meet their demand for gas. However, the report says African leaders should recognise that this will be short-lived because the Ukraine conflict is also accelerating efforts in the Global North to transition away from fossil fuels. The EU has doubled its 2030 renewable energy target from 22% to 45% of capacity and the US is also legislating for a faster transition.

Senior Cleantech Analyst and report author Kofi Mbuk said: “The energy transition from fossil fuels to renewables is inevitable and irreversible. The growth in energy demand globally and regionally is now being met by renewables and squeezing out fossil fuel demand. In Africa – and across emerging economies – solar and wind offer the best route for economic development.”

African Sun warns that demand for Africa’s crude oil and natural gas will dwindle as the world gets deeper into the transition. Falling demand will lead to lower oil and gas prices and investment from international oil and gas companies is likely to decline. If countries develop new production and costly pipeline infrastructure, they risk creating expensive stranded assets that will never deliver expected returns.

The International Energy Agency says that no new investments in fossil fuel production are consistent with the 1.5°C Paris climate target and that even with no changes in national energy policies worldwide, demand for gas will reach a plateau by the end of the decade and oil demand will level off in the mid-2030s.[2]

In most African petrostates oil and gas revenues account for a considerable proportion of GDP, so falling demand will have a major impact on their economies. Their financial stability may be threatened as they earn less from export revenues, licensing and tax, the report warns.

Currently, gas provides around 30% of Africa’s current electricity generation capacity, with coal not far behind. Although Africa is an ideal location for solar energy, with over 50% more sunlight than in the Global North, deployment has been held back by lack of finance, poor electricity infrastructure and political and social instability. The continent accounts for only 2% of utility-scale solar generation globally.

Kofi Mbuk said: “The cost of solar continues to fall dramatically and this means African countries have the opportunity to unlock huge pools of private and public finance for their energy transition. Solar asset owners can now sign Power Purchase Agreement (PPA) contracts at a tariff level that competes with incumbent coal and gas power generating assets. By the end of this decade, we project that across Africa it will be cheaper to generate electricity by building new solar than continue to run both coal and gas power plants.”

The cost of solar power has fallen by over 50% in Africa over the last decade. The report finds that the average cost of new solar generation in Africa is now below $70/MWh and could fall below $40/MWh by 2030.

South Africa is one of a number of countries where it is already cheaper to build new solar than continue running existing coal plants. The cost of generating electricity from solar is $41/MWh and the report finds this is set to fall to $36/MWh by 2025. It costs $46/MWh to generate electricity from existing coal plants and this will rise to $55/MWh in same period.

Coal generates 85% of South Africa’s electricity making it the world’s 12th biggest emitter of carbon dioxide. Its 43GW fleet of coal plants is aging and unreliable and blackouts are common.

“By adopting a resilient clean energy system, South Africa will offer a protective buffer to its economy from the shocks of the next fuel crisis and a better outcome for consumers in terms of more reliable, cheaper and cleaner power,” the report says.

Eskom, the state-owned monopoly power utility, has committed to retire a third of its coal capacity by 2035 and replace it with renewables, but the company is saddled with nearly $30 billion of debt giving it little scope to invest. Eskom estimates that it would cost $35 billion over the next 15 years to close its coal plants and switch to renewables.

The report calls on African policymakers to incentivise private investment by creating a stable regulatory environment with supportive revenue models for solar. They also need to adopt policies to build robust and efficient grid infrastructure that supports the deployment of renewables and addresses instability challenges.

It finds that solar has the potential to grow from 14GW in 2021 to 55GW in 2030 and over 400GW by 2050, providing up to half of Africa’s total installed capacity.

Carbon Tracker established when solar power will compete with coal and gas by calculating the Levelised Cost of Energy of new grid-connected utility-scale solar and the Long Run Marginal Cost of existing coal and gas plants. It modelled future revenues as well as costs of costs of construction, financing, operations and maintenance, fuel and carbon.



Once embargo lifts report can be downloaded here:

To arrange interviews please contact:


Stefano Ambrogi                                                              +44 7557 916940

David Mason                                                             +44 7799 072320

Joel Benjamin                                                                   +44 7429 637423

About Carbon Tracker

The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future.

[1] See Reuters for background: Analysis: Can COP27 deter Africa from a ‘dash for gas’ in green energy transition?, 7-11-22
[2] International Energy Agency, World Energy Outlook 2022, 27-10-22